Feb. 22 (Bloomberg) -- NYSE Euronext, owner of the largest
U.S. equities exchange, is considering ways to improve its plan
for dealing with disasters and said exchanges should consider
mandatory testing after Hurricane Sandy caused the longest
weather shutdown since 1888.

The exchange industry should weigh whether regular testing
of connectivity and backup facilities should be mandatory,
according to comments NYSE Euronext e-mailed today in response
to questions from a U.S. Senate committee concerning
computerized trading venues.

Trading was halted for two days at the end of October when
concerns about human safety and how well the New York Stock
Exchange’s backup plan would work convinced executives that
moving ahead was too risky. The Securities and Exchange
Commission may consider whether exchanges’ emergency regimens
need to be bolstered, a person familiar with the regulator’s
thinking said in November. The person asked not to be named
because the matter is private.

“There are several lessons to be learned from this
event,” NYSE Euronext said. “At a minimum, businesses learned
the importance of a well-prepared and tested business continuity
plan. At NYSE Euronext, we are actively considering changes to
our current disaster recovery model.”

NYSE also responded to December testimony to a Senate
subcommittee from Dan Mathisson, head of U.S. equity trading for
Credit Suisse Group AG, saying some of his statements were false
or misleading. Credit Suisse operates the world’s largest dark
pool, called Crossfinder.

‘Absolute Immunity’

NYSE said trading volume has shifted to off-exchange
venues, disputing Credit Suisse’s claim that it hasn’t. The
exchange also said Credit Suisse’s statement that self-regulatory organizations are afforded “absolute immunity” from
liability for damages is “flatly inaccurate.”

Trading away from exchanges and the biggest electronic
communication networks, or ECNs, was about 33 percent in
October, compared with 16 percent in early 2008, according to
data compiled by Rosenblatt Securities Inc. While dark pools,
which don’t display orders publicly, accounted for less than
half the off-exchange volume, their share has increased about
threefold since the first quarter of 2008, the data show.

NYSE, Nasdaq Stock Market and other public venues compete
with dark pools and brokers for trading volume. The CEOs of NYSE
Euronext and Nasdaq OMX Group Inc., both based in New York, have
argued for several years that different regulatory regimes for
dark pools and exchanges create an unlevel playing field.

‘Windfall’

Credit Suisse’s Mathisson told members of the subcommittee
that the market-data revenue of about $400 million a year the
exchanges and the Financial Industry Regulatory Authority get is
a “government-granted windfall” that far exceeds the
regulatory expenses it’s supposed to offset.

NYSE Euronext said in its response to the committee that
brokers receive about $50 million to $60 million in tape revenue
from the Consolidated Tape Association and Credit Suisse is
inappropriately using an SEC concept release from 1999 for the
basis of determining the proportion of benefits to exchanges.

Katherine Herring, a spokeswoman for Credit Suisse,
declined to comment on NYSE’s statement.